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China copper demand to rise on surging EV output, power investment

Copper demand in China, the world’s top consumer of the metal, will grow faster in 2023, thanks to rising investment in renewable power projects and production of electric vehicles while the country’s expected reopening is seen boosting growth, analysts said.

China’s stringent measures to curb the spread of the coronavirus pandemic as well as a deepening slump in the country’s huge real estate sector have weighed on refined copper demand in 2022. But China is expected to ease some COVID-19 curbs next year, offering some respite to the world’s second-largest economy.

A slump in copper consumption in the construction sector has been more than outweighed by demand from the power grid and auto sector, according to state-backed Minmetals Economic Research Institute.

China’s 2023 copper consumption is set to increase by between 110,000 tonnes and 120,000 tonnes compared with an expected rise of between 50,000 tonnes and 70,000 tonnes this year, Zuo Geng, chief researcher at the institute said on Wednesday at the CRU World Copper Conference Asia in Singapore.

“As demand for copper from the new energy field is beyond expectation, demand for copper in China is still robust and even climbs up a bit,” he said.

Zuo said investments in China’s power grid and power supply projects this year were higher than in the previous three years, adding about 180,000 to 200,000 tonnes of demand.

That more than compensated for the decline in copper demand from the real estate sector of up to 130,000 tonnes.

Zuo did not give total consumption figures for each sector. China’s total consumption of refined copper was 12.5 million tonnes in 2021, according to the World Bureau of Metal Statistics, and 10.7 million tonnes for the first nine months of this year.

Copper demand from the auto sector is set to rise by as much as 160,000 tonnes next year, said Zuo, after demand growth of between 100,000 and 120,000 tonnes in 2022.

Auto production recovered in China in the third quarter, driven by the electric vehicle sector, said Zuo. In the first three quarters of 2022, EV production has already exceeded the whole of last year’s output by 700,000 vehicles, he added.

China’s expected reopening from pandemic restrictions will also give copper consumption a boost of about half a percent, Nicholas Snowdon, metals strategist at Goldman Sachs said at the same event.

China eased some COVID-19 curbs earlier this month but has since tightened some restrictions as coronavirus cases mount.
Source: Reuters (Reporting by Emily Chow, Mai Nguyen and Florence Tan; Writing by Dominique Patton; Editing by Ana Nicolaci da Costa)


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